Executive Briefings

A New Study on Supply-Chain Risk

ImpactFactor recently completed a study on supply-chain risk, surveying managers of more than 100 companies. The results were not encouraging. According to managing director Bill McBeath, many companies don't consider proactive risk-management to be a strategic tool. He was "shocked" at how level their level of investment in that area was, with half reporting expenditures of $50,000 or less to audit and assess suppliers. "Not a single one spent more than $3m," he says. "Given the huge potential impact [of risk] on their shares, we believe companies are seriously under-investing."

ImpactFactor presented respondents with a list of potential risks, including counterfeiting, production snags, natural disasters and shifts in exchange rates. Ninety percent said their supply-chain groups should be involved in planning for such eventualities. But they further reported that supply-chain was doing a "good" or "very good" job of managing risk in just two out of 20 designated areas.

Few companies had managed to implement a risk-management program that extended through multiple tiers of suppliers. Eighty percent said they were managing risk with their immediate vendors, but considered it the Tier 1 supplier's job to handle those further upstream. "But if something goes wrong in the chain," McBeath warns, "it can very easily end up being your problem."

Recent disasters such as the earthquake and tsunami in Japan have shown how seriously they can affect shareholder value. To protect that investment, McBeath says, companies need to know which of its plants are potentially affected, the entities they supply and which are located further upstream in the chain. "Investors would love to have some sort of platform for [determining] that," says McBeath. Having such information on hand, and being able to respond quickly in the event of an emergency, can go a long way toward ensuring a manufacturer's competitive advantage.

To view video in its entirety, click here

Keywords: ImpactFactor, Bill McBeath, Disasters, Earthquake, Tsunami, Supply Chain Security & Risk Mgmt, Global Supply Chain Management, Quality & Metrics, Legal, Govt. & Regulatory Issues, Business Strategy Alignment, Global Logistics, Inventory Planning & Optimization, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, Event Management, Network Design, SC Finance & Revenue Mgmt., SC Planning & Optimization, Supply Chain Visibility

 

ImpactFactor presented respondents with a list of potential risks, including counterfeiting, production snags, natural disasters and shifts in exchange rates. Ninety percent said their supply-chain groups should be involved in planning for such eventualities. But they further reported that supply-chain was doing a "good" or "very good" job of managing risk in just two out of 20 designated areas.

Few companies had managed to implement a risk-management program that extended through multiple tiers of suppliers. Eighty percent said they were managing risk with their immediate vendors, but considered it the Tier 1 supplier's job to handle those further upstream. "But if something goes wrong in the chain," McBeath warns, "it can very easily end up being your problem."

Recent disasters such as the earthquake and tsunami in Japan have shown how seriously they can affect shareholder value. To protect that investment, McBeath says, companies need to know which of its plants are potentially affected, the entities they supply and which are located further upstream in the chain. "Investors would love to have some sort of platform for [determining] that," says McBeath. Having such information on hand, and being able to respond quickly in the event of an emergency, can go a long way toward ensuring a manufacturer's competitive advantage.

To view video in its entirety, click here

Keywords: ImpactFactor, Bill McBeath, Disasters, Earthquake, Tsunami, Supply Chain Security & Risk Mgmt, Global Supply Chain Management, Quality & Metrics, Legal, Govt. & Regulatory Issues, Business Strategy Alignment, Global Logistics, Inventory Planning & Optimization, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, Event Management, Network Design, SC Finance & Revenue Mgmt., SC Planning & Optimization, Supply Chain Visibility